SIF Portfolio: Spectris measures up nicely + 3 new foreign stocks

The Stockopedia investment philosophy is all about letting the numbers talk. History suggests that this is one of the most effective ways to invest, but it’s still a tough sell for many human investors. As thinking, emotional beings, we’re hard-wired to enjoy a good story.

Luckily, I believe this week’s stock has a good story and a tempting set of numbers. FTSE 250 instrumentation and control firm Spectris exists to help other companies make more money, more reliably. This group’s wide range of products all have one goal - improving efficiency and productivity.

By investing in Spectris kit, companies can improve the quality and reliability of their products and services and perhaps make them cheaper. Given the constant need for industrial businesses to manage cost, quality and automation, I think this market should continue to expand.

A strong year

Recent performance has certainly been encouraging. Sales climbed 13% to £1,526.6m last year, while adjusted earnings rose 14% to 145.1p per share, beating expectations. Improved guidance on cost cutting earned the stock a boost from the broker community and the StockRank has risen by 41 points to 95 over the last month.

These much-improved figures have also resulted in Spectris qualifying for my screen since its 2017 results were published in February. Although the portfolio does contain some other industrial stocks, there’s nothing of this kind, leaving the door open for Spectris to join the SIF portfolio.

Valued for growth?

Value is by far the firm’s weakest suite, with a score of just 44/100:

(You can see these breakdowns by going to the sector page and clicking on the ranks)

But even so, there are several things I like about these figures.

P/E versus P/FCF: Spectris’s trailing P/E of 21.3 is quite close to its P/FCF of 26.9. This tells us that free cash flow per share is similar to earnings per share, a good sign of earnings quality.

Earnings yield: The only splash of green in the ValueRank breakdown is the earnings yield. This is one of my favourite metrics as it combines profitability and valuation. By comparing EBIT to enterprise value, a potential buyer gets an idea of how much profit the business generates, relative to its overall valuation. For a business owner, it’s similar to…

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Spectris plc is a supplier of productivity-enhancing instruments and controls. It operates through four segments: Materials Analysis, Test and Measurement, In-Line Instrumentation and Industrial Controls. The Materials Analysis segment provides products and services that determine structure, composition, quantity and quality of particles and materials, during research and product development processes. The Test and Measurement segment supplies test, measurement and analysis equipment, software and services for product design optimization, manufacturing control, microseismic monitoring and environmental noise monitoring. The In-line Instrumentation segment provides process analytical measurement, asset monitoring and online controls, as well as associated consumables and services for primary processing and the converting industries. The Industrial Controls segment provides products and solutions that measure, monitor, control, inform, track and trace during the production process. more »

Globaltrans Investment PLC is a Cyprus-based holding company. The Company is engaged in the provision of railway transportation services using own and leased rolling stock, as well as fleet engaged from third party rail operators, operating lease of rolling stock and freight forwarding (agency) services. The Company through its subsidiaries provides freight rail transportation, railcar leasing and certain ancillary services to clients in Russia, the CIS countries and the Baltics. The Company focuses on the transportation of key industrial freight, including metallurgical cargoes, oil products and oil, coal, and various construction materials. The Company offers railcar leasing in Belarus, Kazakhstan and Russia. The Company's total fleet consists of around 65,448 units, which include Gondola cars, Rail tank cars, Hopper cars and Locomotives. more »

Ence Energia y Celulosa SA, formerly Grupo Empresarial ENCE SA, is a Spain-based company engaged in the operation of pulp mills. The Company' activities are divided into two business units: Pulp and Energy. The Pulp business unit is subdivided into three segments: Pulp, manufacturing pulp and pulp derivatives, such as lignin and biomass, as well as co-generating energy; Forest Management, providing forest crops and wood raw materials, and Forest Services & Other, including residual business activities, as well as forest support services. The Energy business unit focuses on generating energy using forestry and agricultural biomass. The Company operates pulp mills and power generation plants in Spain. Its subsidiaries include Celulosa Energia SAU, Silvasur Agroforestal SAU and Ibersilva SAU, among others. more »

Very interested you have picked up on Globaltrans as I have been an investor for some time and they are rarely mentioned positively. I also invested in UPM - Kymmene Corp and Raute OYJ on a similar basis. All three have been lurking on or around the screen of screens (where I picked them out for further investigation) for a while and I considered them to be worth a go for investment on fundamentals.
Both Globaltrans and UPM are very big companies but I don't recall them being covered much in the media. . That said I recall a number of people on this site (Nov last year) were concerned about the structuring of Globaltrans doing business in russia and located in Cyprus. Also, I gather that some brokers can't trade them, why,I don't know.

I recently acquired some Spectris (LON:SXS) too, but it was the big ranking improvement for Momentum from 46 to 87 that initially caught my eye. In addition when the other rankings were refreshed, the SR increased by 37 to 94, VM up from 51 to 81 and QM up +30 to 100. Promising. Ian

Private investor & writer on stock markets with a particular fondness for free cash flow, dividends and value, plus an interest in resource stocks.
In earlier life, I worked as an engineer in telecoms and IT. The quantitative, rule-based mindset required for this type of work is probably reflected in my investment style.
Another factor that affects my investment choices is my experience working for a large telecoms company at the turn of the century, when tech stocks were booming. Watching this bubble inflate and then implode from the inside was very educational. more »